We got another one of those calls the other day. It went something like this: “Mom has been in the nursing home for 3 years now and her money is gone. Is there anything we can do?” Our hearts sink when we hear this, because for this family, it’s too late for a lot of planning options.
How do you deal with a parent or spouse who can’t stay at home anymore? It’s one of the most stressful things a family can face. Few know what to do because they have never faced this issue before.
The key is the earlier we can plan, the more we can do, the more assets we can protect, and the easier we can make it on the family.
Generally, we see 4 different periods of planning. How much we can do declines as time passes.
1. Too late. When the money has all been spent on the nursing home over several years, it might be too late to protect assets. But we can help the family deal with all the mountains of paperwork and complete the Medicaid application. Oftentimes, our Medicaid team spends 40-50 hours completing a Medicaid application! How long would it take someone less experienced? We can help take the stress off of the family.
2. Not too late. “Mom’s Medicare coverage for nursing home care runs out in about 3 weeks. What do we do?” At this point, the family hasn’t spent any of mom’s money, but in 3 weeks they will start spending A LOT of her savings on the nursing home. (Around $5000 per month in Central Illinois.) We can still do a lot for this family. We call this a “crisis plan” and we move quickly to maximize Medicaid and VA benefits. Often we can still protect 50% or more of mom’s assets.
3. Protect your nest egg. What if mom is still living at home, but her health is going downhill? The family sees a point in the future when she will need care. So how do you plan ahead? One option is to create a special kind of trust, a Medicaid Asset Protection Trust, to protect the nest egg. The nest egg includes the assets she doesn’t plan to need or spend during her life. Maybe we protect the house or some savings or investments, while still leaving enough for her to continue to live well. Whatever assets were placed in the trust will be 100% protected once 5 years have passed.
4. Best option. The absolute best option is to buy long-term care insurance when you are still young and healthy. Often it’s too expensive or not available once you hit retirement age. Those who buy good long-term care insurance can rest easy, knowing the insurance company will help pay for their future care, instead of it coming out of their family’s inheritance.
For more details on how nursing home crisis planning works, click here to read a case study.